894 F.

2d 651
51 Fair Empl.Prac.Cas. 1725,
52 Empl. Prac. Dec. P 39,583, 58 USLW 2420,
58 USLW 2506, 15 Fed.R.Serv.3d 1091,
5 Indiv.Empl.Rts.Cas. 241

Anne E. SPENCER, Plaintiff-Appellant,

v.
GENERAL ELECTRIC COMPANY, Defendant-Appellee,
Equal Employment Opportunity Commission; The Equal
Employment Advisory Council, Amici Curiae,
and
James Russell Neal, Defendant.
Anne E. SPENCER, Plaintiff-Appellee,
v.
GENERAL ELECTRIC COMPANY, Defendant-Appellant,
Equal Employment Opportunity Commission, Amicus Curiae,
and
James Russell Neal, Defendant (Two Cases).
Anne E. SPENCER, Plaintiff-Appellant,
v.
GENERAL ELECTRIC COMPANY, Defendant-Appellee,
Equal Employment Opportunity Commission, Amicus Curiae,
and
James Russell Neal, Defendant.
Anne E. SPENCER, Plaintiff-Appellant,
v.
GENERAL ELECTRIC COMPANY; James Russell Neal,
Defendants-Appellees,
Equal Employment Opportunity Commission, Amicus Curiae
(Two Cases).
Nos. 88-3892, 88-1302, 88-1389, 89-2323, 89-2350 and 89-2356.

United States Court of Appeals,

Fourth Circuit.

Argued Nov. 2, 1989.

Decided Jan. 16, 1990.
Rehearing Denied Feb. 13, 1990.

Jane Lang (Rebecca K. Troth, Paul C. Sprenger, Sprenger & Lang, on

brief) for appellant.
Samuel A. Marcossan (Charles A. Shanor, Gen. Counsel, Gwendolyn
Young Reams, Associate Gen. Counsel, Vincent J. Blackwood, Asst. Gen.
Counsel, E.E.O.C., on brief) for amicus curiae.
Peter G. Nash (Jonathan R. Mook, Frances C. Moran, Ogletree, Deakins,
Nash, Smoak and Stewart, on brief) for appellee.
Robert E. Williams, Douglas S. McDowell, Garen E. Dodge, McGuiness
& Williams, on brief) for amicus curiae.
Before HALL and MURNAGHAN, Circuit Judges, and HARGROVE,
United States District Judge for the District of Maryland, sitting by
designation.
K.K. HALL, Circuit Judge:

Anne E. Spencer and the General Electric Company ("G.E.") each appeal from
the judgments entered below in favor of Spencer on her hostile environment
sexual harassment claim under Title VII of the Civil Rights Act of 1964, 42
U.S.C. Secs. 2000e et seq., and in favor of G.E. on all other claims. Likewise,
both parties appeal from the district court's award of attorney's fees to Spencer
as a prevailing party under 42 U.S.C. Sec. 2000e-5(k). Finding no error worthy
of reversal, we affirm.

I.
2

This case arises from Spencer's allegations of sexual harassment and abuse by
her immediate supervisor at G.E., James Neal. We leave the details of these
allegations to the thorough district court opinion on the merits of Spencer's
claims. Spencer v. General Electric Co., 697 F.Supp. 204, 206-16
(E.D.Va.1988). For our purposes, an outline of the procedural history of the
case will suffice.

Spencer filed suit against Neal and G.E. in November 1987. She alleged sexual

harassment under Title VII, as well as the state tort claims of assault and
battery, intentional infliction of emotional distress, invasion of privacy, and
negligent supervision. The basis of these claims was the allegation that over
approximately a two-year period, Neal, during office hours, repeatedly solicited
Spencer for sexual relations and repeatedly sexually assaulted her. This conduct
was alleged to have culminated in Neal's rape of Spencer in October 1986.1
Spencer sought in excess of one million dollars in compensatory and punitive
damages as well as appropriate equitable relief.
4

Prior to trial, the district court dismissed the invasion of privacy claims and the
negligent supervision claim on the grounds that Spencer had failed to state
viable causes of action under Virginia law. The court also ruled that Virginia's
two-year statute of limitations, Va.Code Ann. Sec. 8.01-243(A), barred all
claims arising from any assaults which occurred more than two years before
Spencer filed suit.

A simultaneous bench and jury trial on the Title VII and remaining tort claims
commenced on May 24, 1988. At the close of Spencer's evidence, the court
directed a verdict in favor of G.E. on all remaining tort claims. The court
reasoned that the only way G.E. could be held liable for Neal's tortious conduct
was through the doctrine of respondeat superior and that, since Neal's acts were
clearly outside the scope of his employment, the claims had to be dismissed
because Spencer had produced insufficient evidence of G.E.'s ratification of
Neal's actions. Alternatively, the court ruled that even if G.E. had ratified Neal's
actions, Spencer's claims were precluded by the Virginia Workers'
Compensation Act, Va.Code Ann. Secs. 65.1 et seq. ("WCA").

After the directed verdict, Spencer decided to sever her Title VII claims from
the tort claims and reached an agreement with Neal to dismiss her claims
against him without prejudice, pending final resolution of G.E.'s tort liability.
The court then granted Spencer's motion to this effect and, pursuant to
Spencer's Fed.R.Civ.P. 54(b) motion, entered final judgment in favor of G.E. on
the tort claims.2

The jury was then dismissed and the trial continued on the Title VII claims,
eventually lasting eight days. Spencer tried her case under both the hostile
environment and quid pro quo theories of sexual harassment. In a lengthy
opinion issued on October 4, 1988, the district court found in favor of Spencer
on the hostile environment claim, but against her on the quid pro quo claim.
Spencer, 697 F.Supp. at 216-19. Specifically, the court found that although
Spencer had proven that sexual horseplay was prevalent in her workplace and
that Neal had solicited her for sex, she had failed to prove that any sexual

assaults had ever occurred or that her refusal to have sex with Neal had, in any
way, prejudiced her employment. Id. at 207-17. Because G.E. had quickly
transferred Spencer and because Spencer had not missed any uncompensated
days from work, the court found that she could not prove any tangible loss due
to the sexual harassment and, accordingly, awarded nominal damages of one
dollar. Id. at 219. The court also found that since Neal had left G.E. and G.E.
had implemented an extensive anti-sexual harassment policy, injunctive relief
was not necessary.3
8

Spencer promptly moved for reconsideration of the denial of injunctive relief.

In a thorough memorandum order, the district court denied the motion, again
basing its decision on the unlikelihood of future sexual harassment problems at
G.E. in view of G.E.'s commitment to its newly-implemented anti-harassment
policy.4 Spencer v. General Electric Co., 703 F.Supp. 466 (E.D.Va.1989).

Spencer submitted a petition for a partial award of attorney's fees under 42

U.S.C. Sec. 2000e-5(k) on the basis of the judgment in her favor on the hostile
environment claim. She claimed in excess of $380,000.00 in fees. Spencer v.
General Electric Co., 706 F.Supp. 1234, 1236 (E.D.Va.1989). Not
unexpectedly, G.E. contested the petition on several grounds--primary among
them being that she was not a prevailing party and that all fees incurred after
G.E.'s Fed.R.Civ.P. 68 offer of judgment were not recoverable because the
judgment Spencer was eventually granted was less favorable than G.E.'s offer. 5
The district court agreed with Spencer that she had prevailed in the litigation
because, among other things, she had forced G.E. to adopt the anti-harassment
policy. Id. at 1237-38. However, the court agreed with G.E. that the relief
Spencer received, including the anti-harassment policy, was not more favorable
than G.E.'s offer, especially in monetary terms. Id. at 1241. Consequently, the
court disallowed all post-offer fees, and awarded Spencer pre-offer attorney's
fees of $52,179.00, local counsel fees of $2,252.20, and $2,278.20 in costs and
expenses. Id. at 1248. Both parties have appealed this award. Nos. 89-2350, 892356.

II.
10

To facilitate our discussion of the issues raised in this appeal, we will address
them in three related areas of law--the Virginia tort claims, the merits of the
Title VII claims, and the award of attorney's fees under 42 U.S.C. Sec. 2000e5(k).

A. Virginia Tort Claims

11

Spencer contends that the district court erred in holding that Virginia law does
not recognize claims for invasion of privacy and negligent supervision. She
also argues that the court was in error by dismissing, under the
Commonwealth's statute of limitations, those portions of her claims which were
based on Neal's acts which occurred more than two years prior to her filing suit.
She contends that these acts squarely fit within the "continuing tort" exception
to the statute. Spencer also maintains that the trial court erred in directing a
verdict in favor of G.E. on her assault and battery and intentional infliction of
emotional distress claims. She contends that G.E. is vicariously liable for Neal's
torts because Neal, as G.E.'s manager and agent, was aided in accomplishing
his tortious acts by the existence of the agency relationship. Thus, the mere
existence of the agency relationship under these circumstances establishes
liability, regardless of whether the prerequisites of respondeat superior are
shown. Alternatively, while conceding that Neal's actions were outside the
scope of his employment, Spencer argues that the evidence at trial presented a
jury issue over G.E.'s ratification of those actions and, therefore, a directed
verdict on the grounds of respondeat superior was in error. She also contests the
court's alternative holding that the WCA precluded G.E.'s liability. Finally, she
challenges the trial court's exclusion under Fed.R.Evid. 403 of evidence of
Neal's consensual sexual relations with other of his subordinates. We take up
these contentions in turn.

12

1. While Spencer's invasion of privacy claims were dismissed purely as a

matter of law, i.e., on the grounds that such a claim does not exist in Virginia,
we are precluded from reaching this issue, as well as the arguments
surrounding her assault and battery claim, by the facts as found by the trial
court. Recently, in Dwyer v. Smith, 867 F.2d 184, 192-93 (4th Cir.1989), we
reaffirmed our rule that when a trial court's findings of fact in a fully-litigated
Title VII claim are dispositive of a claimant's previously-dismissed legal
claims, any error in the dismissal of those claims has been rendered harmless.6
Such is the case here.

13

Spencer readily admits that proof of the sexual assaults by Neal is "essential" to
both her invasion of privacy and assault and battery claims. This proof she
simply failed to produce. As the trial court noted: "Spencer has failed to carry
her burden of proving the sexual assaults by a preponderance of the evidence....
Accordingly, the Court cannot find that Neal sexually assaulted Spencer."
Spencer, 697 F.Supp. at 212. Likewise, the court concluded that as to the
occurrence of the alleged rape, "Spencer has failed to carry her burden of
proof." Id. at 213.

14

Spencer argues that these findings do not collaterally estop her legal claims

14

Spencer argues that these findings do not collaterally estop her legal claims
because they were not essential to the disposition of her Title VII claims. This
argument is at best disingenuous. While sexual assault and rape are certainly
not elements of a Title VII sexual harassment cause of action, Spencer based
her civil rights claims firmly on the existence of Neal's attacks. She is the one
who made these findings essential to her Title VII claims by the way she
pleaded and tried this case. To now allow her to avoid the effects of her chosen
course would fly in the face of the principles of fairness and judicial economy
which underlie the collateral estoppel rule. See Ritter v. Mount St. Mary's
College, 814 F.2d 986, 991-92 (4th Cir.1987).

15

Spencer was afforded a full and fair opportunity to prove the assaults before the
district court and failed. Consequently, she is now collaterally estopped from
raising against G.E. the legal claims based on the unproven assaults, i.e.,
invasion of privacy and assault and battery. 7 Accordingly, any error in regard to
these claims was harmless and, without comment on the trial court's reasoning,
we affirm its dismissal of the invasion of privacy claim and its directed verdict
on the assault and battery claim.

16

2. To reject Spencer's contention that there exists in Virginia a cause of action

against G.E. for its negligent supervision of Neal, we need look no further than
the Supreme Court of Virginia's decision in Chesapeake and Potomac
Telephone Co. of Virginia v. Dowdy, 235 Va. 55, 365 S.E.2d 751 (1988). In
Dowdy, the Virginia court framed the issue as whether "the common law of
Virginia recognizes a tort of negligent supervision of an employee by the
employer and its managerial personnel." Id. 365 S.E.2d at 751. In answering
the question in the negative, the court reasoned that there can be no negligence
unless there has been the breach of a legal duty and "[i]n Virginia, there is no
duty of reasonable care imposed upon an employer in the supervision of its
employees under these circumstances...." Id. 365 S.E.2d at 752-53.

17

Not surprisingly, Spencer attempts to distinguish her case from Dowdy on the
"circumstances." In Dowdy, the negligent supervision claim was based on the
employer's negligence in failing to stop the employee's supervisors from
intentionally harassing and excessively criticizing the employee about his job
performance. Id. 365 S.E.2d at 752-53. Spencer contends that her claim is
inherently different primarily because it is based on Neal's sexual assaults and
sexual solicitations. However, as our previous discussion made clear, Spencer
can no longer rely on the allegations of assault which she has failed to prove.
Consequently, her claim is reduced to one based on G.E.'s negligence in failing
to prevent Neal from intentionally harassing her by making unwanted sexual
solicitations and by engaging in sexual horseplay. Thus understood, Spencer's
claim is not sufficiently different from the claim in Dowdy to remove it from

the ambit of Dowdy 's holding. Therefore, we affirm the district court's
dismissal of the negligent supervision claim.8
18

3. Spencer's final state law argument is that the trial court erred in directing a
verdict on the question of G.E.'s vicarious liability for Neal's alleged torts,
including her claim for intentional infliction of emotional distress. She argues
that respondeat superior is not the only basis for holding G.E. liable for this tort
and offers as an alternative an agency theory of liability whereby an employer is
made liable for the torts of its employee-agent when the mere existence of the
agency relationship facilitates the consummation of the tort. See Restatement
(Second) of Agency Sec. 219(2)(d) (1958); e.g., Sparks v. Pilot Freight
Carriers, Inc., 830 F.2d 1554, 1558-59 (11th Cir.1987).

19

The problem with this theory of vicarious liability, as G.E. points out, is twofold. First, the cases that Spencer relies upon to support her argument involve
Title VII liability, a much different animal than common law tort liability. See
Vinson v. Taylor, 753 F.2d 141, 150-51 (D.C.Cir.1985), aff'd on other grounds
sub nom. Meritor Savings Bank, FSB v. Vinson, 477 U.S. 57, 106 S.Ct. 2399,
91 L.Ed.2d 49 (1986). Title VII employer liability is premised on a statutory
scheme which broadly defines "employer," 42 U.S.C. Sec. 2000e(b), and which
is intended to effectuate the remedial and public policy goals of the Civil
Rights Act of 1964. Common law tort liability, on the other hand, is not
powered by the public policy engine of Title VII, but rather is concerned
primarily with the proper economic balance of risks and harms in society. Id.
Understandably, these differing rationales make us hesitant to expand Virginia's
common law on a theory of liability rooted in Title VII.

20

This leads to the second problem with Spencer's argument--that she cannot
point to a single Virginia case which adopts her proposed theory. In ruling on
state law issues our task is clear: to apply the law of the state as we determine it
would be applied by the state courts. 19 C. Wright, A. Miller, & E. Cooper,
Federal Practice and Procedure, Sec. 4507 (1982). This determination is one
made with caution, especially when we are asked, as Spencer does here, to
extend state law to a point beyond which a state's highest court has not taken it.
W.A. Wright, Inc. v. KDI Sylvan Pools, Inc., 746 F.2d 215, 218 (3d Cir.1984).
To adopt Spencer's proffered theory would dramatically broaden an employer's
vicarious liability under Virginia law and would do so without any indication
from the Virginia courts that they are so inclined. Such an extension of a state's
common law is one that a federal court should not make. Consequently, the
district court was correct in limiting G.E.'s vicarious liability to the traditional
rules of respondeat superior.

21

Likewise, we have no trouble affirming the district court's conclusion that

Spencer did not make out a jury question of G.E.'s ratification of Neal's acts. As
the district court noted, there is simply no evidence that G.E. ratified Neal's
harassing conduct. In fact, the evidence at trial was that as soon as G.E. was
informed by Spencer of the alleged incidents, she was immediately transferred
away from Neal and an investigation was launched which eventually resulted in
Neal's resignation from the company. Spencer, 697 F.Supp. at 215-16. On these
facts, the district court's directed verdict on respondeat superior grounds must
be affirmed.9

B. Title VII
22

Spencer has two complaints about the trial court's holding on her discrimination
claims. First, she contends that the court properly ruled at the end of her
evidence that she had made out her prima facie case of quid pro quo sexual
harassment and, consequently, the court had to have erred in ruling at the end of
the case that she had not made the necessary prima facie showing. She further
contends that this error led the court to erroneously rule in favor of G.E. on the
claim. Second, Spencer maintains that the court granted her inadequate relief
on her successful hostile environment claim. Specifically, she requests a grant
of "make whole" economic relief in the form of restoration of 49 leave days that
she expended in pursuit of this litigation and in recovery from the stress-related
illnesses which she alleged were the result of Neal's sexual harassment. Spencer
also contends that the trial court erred by not granting her injunctive relief
against G.E. She argues that the anti-sexual harassment policy unilaterally
adopted by G.E., and done so only after being prodded by this litigation, does
not give adequate assurance that sexual harassment will not recur. We address
these arguments seriatim.

23

This Circuit has acknowledged that the many forms of sexual discrimination
can be categorized, for analytical purposes, into two varieties: harassment that
creates an offensive (hostile) work environment and harassment where sexual
consideration is demanded in exchange for job benefits. Katz v. Dole, 709 F.2d
251, 254 (4th Cir.1983). This latter variety, known as quid pro quo sexual
harassment, can be established by a five-element prima facie case:

1. The employee belongs to a protected group.

24
2. The employee was subject to unwelcome sexual harassment.
25
3. The harassment complained of was based upon sex.
26

27The employee's reaction to the harassment affected tangible aspects of the

4.
employee's compensation, terms, conditions, or privileges of employment. The
acceptance or rejection of the harassment must be an express or implied condition to
the receipt of a job benefit or cause of a tangible job detriment to create liability.
Further, as in typical disparate treatment cases, the employee must prove that she
was deprived of a job benefit which she was otherwise qualified to receive because
of the employer's use of a prohibited criterion in making the employment decision.
28The employer, as defined by Title VII, 42 U.S.C. Sec. 2000e(b), knew or should
5.
have known of the harassment and took no effective remedial action.10
29

Glezos v. Amalfi Ristorante Italiano, Inc., 651 F.Supp. 1271, 1276

(D.Md.1987), citing Hensen v. City of Dundee, 682 F.2d 897, 903-05 (11th
Cir.1982); Spencer, 697 F.Supp. at 216-17.

30

Once the prima facie case is made, an inference that quid pro quo sexual
harassment has occurred arises and the burden of production shifts to the
defendant to rebut this presumption with legitimate, nondiscriminatory reasons
for the employment decision in question. McDonnell Douglas Corp. v. Green,
411 U.S. 792, 802, 93 S.Ct. 1817, 1824, 36 L.Ed.2d 668 (1973); Texas Dept. of
Community Affairs v. Burdine, 450 U.S. 248, 253-54, 101 S.Ct. 1089, 1093-94,
67 L.Ed.2d 207 (1981). If the presumption is rebutted, the burden of production
returns to the plaintiff to show that the defendant's proffered nondiscriminatory
reasons are pretextual and that the employment decision was based on a
sexually-discriminatory criterion. Burdine, 450 U.S. at 256, 101 S.Ct. at 1095.
Throughout this shifting scheme of evidentiary burdens, however, the ultimate
burden of persuasion rests on the plaintiff. Id. at 253, 101 S.Ct. at 1093.

31

Assessing Spencer's case under this analysis, we agree with her that, contrary to
the district court's holding, she made out her five-part prima facie case. Our
conclusion is borne out by the district court's own findings of fact. The district
court found that Spencer suffered sexual harassment at the hands of her
immediate supervisor Neal, in the form of unwanted sexual solicitations and
sexual horseplay. Thus, there can be no question that elements 1, 2, 3, and 5
have been met. As to element 4, she produced evidence that another female
employee who worked under Neal, and who succumbed to his sexual desires,
received larger pay increases than she received. Spencer, 697 F.Supp. at 208.
Furthermore, Spencer proved that there was a job opening for which she sought
a promotion, that she was qualified for the position, that the promotion was
offered by Neal, that she refused Neal's solicitations, and that the job remained
open. Id. at 207. We find this evidence more than sufficient to establish element
4 and complete the prima facie case.

32

Where our agreement with Spencer's argument ends is that we do not believe
that the district court's confusion over whether or not a prima facie case had
been established requires us to reverse the court's ultimate holding. Rather, our
review of the district court's meticulous findings of fact leads us to conclude
that the prima facie case was rebutted by G.E. and that Spencer could not
overcome that rebuttal.

33

This conclusion is also borne out by the trial court's findings of fact.
Specifically, the court found that Neal never mentioned sex in connection with
a promotion, id. at 207; that job benefits received by the employee who did
have sex with Neal were based on merit, not sex, and that the employee
received no preferential treatment on the basis of sexual favors, id. at 208; and
that Neal did process and submit the necessary paperwork for Spencer's
promotion. Id. at 207. It is clear from these unchallenged findings of fact11 that
the presumption of quid pro quo harassment had been irrefutably rebutted by
G.E. Consequently, although the district court did not reach its result by the
proper reasoning, the result was, nonetheless, correct. Accordingly, we affirm
the holding that no quid pro quo sexual harassment was proven.

34

Turning to Spencer's request for restoration of the 49 leave days, we are at a

loss to see how she has been economically disadvantaged. We do not disagree
with Spencer that the purpose of the remedial portions of Title VII is to "make
whole" all economic injuries which result from discrimination. Albemarle
Paper Co. v. Moody, 422 U.S. 405, 418, 95 S.Ct. 2362, 2372, 45 L.Ed.2d 280
(1975). However, G.E. has already done this. Once Spencer expended all of her
sick leave and personal leave time, G.E. approved a special leave allowance for
Spencer so that she did not have a single unpaid day during the period in
question. Further, Spencer alleged that much of her time off from work was
directly related to the sexual assaults and the rape which she subsequently
failed to prove. Thus, Spencer has not suffered any out-of-pocket losses and
complains only of lost personal leave time which was supposedly the direct
result of assaults that were not proven. Under these circumstances, we cannot
find error in the trial court's refusal to reinstate her lost leave time.

35

Finally, we reach Spencer's request for injunctive relief. The district court
denied this request in its October 4, 1988, order but later expanded on its
reasoning in a subsequent January 17, 1989, order. Spencer v. General Electric
Co., 703 F.Supp. 466 (E.D.Va.1989). She complains that this refusal to enjoin
G.E. was an abdication by the court of its duty under Title VII to "render a
decree which will so far as possible ... bar like discrimination in the future."12
Albemarle Paper Co., 422 U.S. at 418, 95 S.Ct. at 2372. The lower court's
extensive findings of fact supporting its conclusion that sexual harassment is

not likely to recur at G.E., however, persuades us that Spencer is wrong.

36

We undertake our review of the district court's decision not to issue an

injunction with a large measure of restraint. In general, injunctive relief is a
matter left to the discretion of a trial court and that discretion should not be
disturbed absent a "strong showing of abuse." United States v. W.T. Grant Co.,
345 U.S. 629, 633, 73 S.Ct. 894, 897, 97 L.Ed. 1303 (1953). Although
injunctions are by no means mandatory in a Title VII case, a district court must,
of course, exercise its discretion in light of the prophylactic purposes of the Act
to ensure that discrimination does not recur. Johnson v. Brock, 810 F.2d 219,
225 (D.C.Cir.1987); Albemarle Paper Co., 422 U.S. at 416-17, 95 S.Ct. at
2371. If this is done, we then should defer to the lower court's choice in
crafting appropriate relief in recognition of its greater familiarity with the
peculiar circumstances of the case. Brock, 810 F.2d at 226.

37

In reaching its decision to not order an injunction, the district court thoroughly
examined the record before it and concluded simply that Spencer failed to
prove that there was a "cognizable danger of a recurrent violation" of Title
VII.13 Spencer, 703 F.Supp. at 473. We agree. This is not a case of systematic
company-wide discrimination, but rather this case presents an isolated incident
of one supervisor run amok. In response to this problem, G.E. has gotten rid of
the offending supervisor, transferred plaintiff to a job of equal grade, and
instituted an extensive company-wide anti-sexual harassment policy. While it is
true that this policy was instituted at least partially in response to this litigation,
the trial court found that the policy reflects a bona fide committed effort by
G.E. to combat sexual harassment in the workplace. Id. at 471.

38

Spencer's argument for an injunction is in essence a contention that remedial

measures undertaken by a defendant after the instigation of litigation will never
be adequate to obviate injunctive relief. This is a position that we cannot adopt.
Such a principle would inevitably undercut the remedial goals of Title VII in
that it would discourage voluntary compliance with the Act by removing any
incentive for an employer, once sued, to clean its own house. Here, G.E. has
done everything practicable to relieve Spencer from the effects of past
harassment and to permanently remove sexual harassment from its workplace.
Under these circumstances, we see no abuse of discretion by the trial court in
refusing to issue an unnecessary injunction. Accordingly, we affirm on this
point.

C. Attorney's Fees
39

Spencer contends that the district court erred when it refused to award her

attorney's fees and costs for the time after G.E.'s offer of judgment under
Fed.R.Civ.P. 68. She argues that the inherent unquantifiability of nonpecuniary injunctive relief makes impossible any meaningful comparison under
Rule 68 between the injunction offered by G.E. and the anti-harassment policy
adopted as a result of the lawsuit. Further, she complains that even if a
comparison were theoretically possible, G.E.'s offer was so vague and
incomplete that it cannot reasonably be compared to the detailed anti-sexual
harassment policy. Spencer also argues that G.E.'s ability to unilaterally change
the circumstances after its Rule 68 offer was rejected makes the Rule's
application to defeat her post-offer fee request nothing more than a defendant's
tactical gambit that is directly inimicable to Title VII's policy of encouraging
private citizens to vindicate their civil rights by providing a means for adequate
attorney compensation. Finally, Spencer maintains that even if G.E.'s offer and
the final judgment should be compared under the Rule, the detailed antiharassment policy adopted by G.E. along with the other relief she received is
far more favorable than G.E.'s pretrial offer.
40

Amicus curiae, the Equal Employment Opportunity Commission ("EEOC"),

joins in this final argument and also encourages us to overrule the trial court's
opinion to the extent that it sanctions comparison of pecuniary relief with nonpecuniary relief in making the Rule 68 comparison. Rather, EEOC maintains
that a better approach would be, where a plaintiff achieves significant nonpecuniary relief, to disregard any monetary differences between the Rule 68
offer and the final judgment and compare only the non-pecuniary aspects of the
two to determine whether or not the final judgment is more favorable. EEOC
argues that this standard is more compatible with Title VII's overriding interest
in eliminating discrimination.

41

In its cross-appeal G.E. raises several issues regarding the fee matter, only two
of which merit our discussion. The first is that in making the Rule 68
comparison, a trial court is constrained by the plain language of the Rule and
must compare only the terms of the actual judgment entered, as opposed to the
actual result obtained, with the terms of the offer. Thus, G.E. maintains that
because no injunction was entered against it and because the anti-harassment
policy it adopted was not part of the lower court's formal judgment, G.E.'s pretrial offer was clearly superior to Spencer's judgment. Second, G.E. contends
that Spencer is not a prevailing party in this litigation because she was
primarily seeking monetary damages, which she did not receive, rather than the
anti-harassment policy that was implemented.14

42

Amicus curiae, the Equal Employment Advisory Council ("EEAC"), joins G.E.
in its first argument. It also urges that we adopt a standard of comparison under

Rule 68 that abstains from any comparison of non-pecuniary aspects of an offer

and judgment and instead focuses solely on the monetary relief offered versus
the monetary relief received. EEAC argues that this standard has the benefit of
ease of application and is particularly appropriate in cases such as this where
monetary relief was clearly the primary focus of the plaintiff's efforts.
43

We will address the prevailing party issue raised by G.E. first and then move
on to the parties' Rule 68 contentions.

44

1. In Texas State Teachers Assoc. v. Garland Indep. School Dist., --- U.S. ----,
109 S.Ct. 1486, 103 L.Ed.2d 866 (1989), the Supreme Court made clear that as
long as a party succeeds on "any significant issue in the litigation which
achieved some of the benefit that the part[y] sought in bringing suit," that party
has "prevailed" for purposes of fee-shifting in a civil rights action.15 Id. 109
S.Ct. at 1493 (quotation omitted). In reaching this conclusion, the Court
expressly considered and rejected G.E.'s position that prevailing party status
should hinge on plaintiff's success on its primary grounds for relief.16 Id. As
long as the plaintiff can "point to a resolution of the dispute which changes the
legal relationship between itself and the defendant ... in a manner which
Congress sought to promote in the fee statute," that plaintiff has prevailed. Id.
The Court recognized the inherent limits to this rule and noted that, in a rare
case, a plaintiff's technical success on a claim may be so de minimis that it
cannot be said that the plaintiff has "prevailed" for fee-shifting purposes. Id.

45

Turning to the case at hand, if we were to look only at the one dollar judgment
entered below in evaluating Spencer's success, we might be faced with just such
a rare case. However, our inquiry should not be so limited. In Child v. Spillane,
866 F.2d 691, 692-93 (4th Cir.1989), we recognized that to get a truer picture
of a plaintiff's success we should look outside the final judgment to voluntary
actions taken by a defendant so long as those actions are causally connected to
the litigation. Here, the trial court found as a fact that this lawsuit served "as a
catalyst for the prompt development and promulgation of G.E.'s revised [antiharassment] policy." Spencer, 706 F.Supp. at 1238. This finding is sufficient to
support the court's conclusion that Spencer was a prevailing party. As we said
in Child, "[f]ees may be awarded even where a party's efforts have merely
served to a limited extent to expedite the planning and achievements gained."
Child, 866 F.2d at 693 (quotation omitted). Thus, we affirm the trial court's
holding that Spencer was a prevailing party for purposes of 42 U.S.C. Sec.
2000e-5(k).

46

2. We begin our discussion of the Rule 68 issues by disposing of Spencer's

contention that the Rule's application to Title VII cases in some way undercuts

the policy goals of the Act. In Marek v. Chesny, 473 U.S. 1, 10-12, 105 S.Ct.
3012, 3017-18, 87 L.Ed.2d 1 (1985), the Supreme Court found that the
application of Rule 68 to civil rights cases posed no such policy concerns.17
Rather, the Court found that Rule 68's neutral policy of encouraging
settlements, while certainly making civil rights plaintiffs think hard before
continuing litigation, is fully consistent with the Congressional intent behind
fee-shifting provisions. Id. 105 S.Ct. at 3017. The Supreme Court simply found
nothing incompatible between the policies of protecting civil rights and
promptly settling litigation. Id. at 3018.
47

Further, the fact that a civil rights defendant can voluntarily comply with Title
VII and negate the basis for a plaintiff's request for injunctive relief after a Rule
68 offer has been rejected does not make the Rule hostile to Title VII. In all
litigation, after a plaintiff rejects a settlement offer, a defendant can always
change its conduct to comply with a plaintiff's demands, thereby reducing the
plaintiff's chances for victory and reducing her claims for damages and fees.
This is one of the inherent risks of litigation that falls no more heavily on a
Title VII litigant than it does on any other civil complainant. Rule 68 must
apply with full force to this claim as it does to all other civil actions brought in
the federal courts. We do not see how its even-handed application is contrary to
the dictates of Title VII and thus, to the extent Spencer's and the EEOC's
arguments are based on a hostility between Rule 68 and Title VII, they are
rejected.

48

We begin our analysis of the rest of the Rule 68 issues where we most properly
should, the text of the Rule itself:

Rule 68. Offer of Judgment

49

At any time more than 10 days before the trial begins, a party defending against
a claim may serve upon the adverse party an offer to allow judgment to be
taken against the defending party for the money or property or to the effect
specified in the offer, with costs then accrued.... [If the offer is rejected and if]
the judgment finally obtained by the offeree is not more favorable than the
offer, the offeree must pay the costs incurred after the making of the offer.18

50

(Emphasis added.)

51

The language of the Rule could not be more plain. A court's task under the Rule
is to compare the offer of "judgment" to the "judgment finally obtained" by the
offeree and determine if the latter is more favorable than the former. In making

this comparison, the court below strayed from this plain mandate, seeing fit to
include the non-judgment relief Spencer acquired as part of her "judgment
finally obtained." Spencer, 706 F.Supp. at 1241. This was in error.19
52

Our interpretation of Rule 68 is guided by the Supreme Court's recent

admonition in Pavelic & Leflore v. Marvel Entertainment Group, --- U.S. ----,
110 S.Ct. 456, 107 L.Ed.2d 438 (1989): "We give the Federal Rules of Civil
Procedure their plain meaning, and generally with them as with a statute, when
we find the terms unambiguous, judicial inquiry is complete." Id. (citation,
quotation omitted). The Court made clear first in Delta Airlines, Inc. v. August,
450 U.S. 346, 101 S.Ct. 1146, 67 L.Ed.2d 287 (1981), and later in Chesny, that
this principle of interpretation applies with full force to Rule 68. In Delta, the
Court repeatedly stressed that a literal interpretation of the Rule was the only
appropriate reading of its language. Id. at 352-62, 101 S.Ct. at 1150-55. In
Chesny, the Court emphasized that the "plain meaning" of the Rule is the only
one which will yield the proper relationship between it and the civil rights feeshifting statute in question. As applied to the issue at hand, this principle and
the reasoning of these decisions demand that we interpret the word "judgment"
to mean "judgment."

53

Spencer's and EEOC's arguments about the lower court's application of the
Rule do not specifically address this issue and seem to assume that "judgment
finally obtained" really means "relief finally obtained." Overlooking the fact
that this assumption ignores the plain wording of the Rule, we note that
common sense informs that often the relief a plaintiff obtains from a lawsuit is
quite different from the judgment obtained from that lawsuit. In fact, many
lawsuits are voluntarily dismissed before ever reaching the judgment stage
because the mere filing of the suits enabled the aggrieved parties to obtain all
the relief they sought. Thus, "judgment" and "relief" are commonly understood
to be two very different concepts and to treat the two interchangeably is an
interpretation of the Rule we cannot adopt.20

54

We find implicit in Spencer's and EEOC's arguments the suggestion that Rule
68 should be given an expansive interpretation to effectuate the strong public
policies behind Title VII. We reject this temptation. Rule 68 is a rule of
procedure, not substance. Its purpose is to provide an efficient and neutral
means to settle litigation, irrespective of the nature of the underlying disputes.
As the Supreme Court noted in Chesny, Rule 68 does not, and was not intended
to, favor either plaintiffs or defendants in civil rights litigation. Chesny, 473
U.S. at 10-11, 105 S.Ct. at 3017. And as the Court recently made clear in
Martin v. Wilks, --- U.S. ----, 109 S.Ct. 2180, 2187-88, 104 L.Ed.2d 835
(1989), the Rules of Civil Procedure must not be warped to conform to the

demands of Title VII litigation.

55

56

In sum, we are persuaded by G.E. that the unambiguous language of Rule 68

must be given its plain meaning and accordingly, in making the comparison
required by the Rule, a trial court should consider only the terms of the
"judgment finally obtained" by the offeree, and nothing more.
This holding does not weaken the trial court's conclusion that Spencer was not
entitled to post-offer fees but, in fact, strengthens it. Spencer was offered
$10,000, job-related relief, and an injunction prohibiting G.E. from
employment practices violating Title VII. The judgment she finally obtained
was for one dollar.21 Therefore, though on different reasoning, we affirm the
trial court's holding that the Rule 68 offer precluded the award of post-offer
fees and costs.22

III.
57

Accordingly, for the reasons stated above, the judgment of the trial court is
affirmed.

58

AFFIRMED.
MURNAGHAN, Circuit Judge, dissenting in part:

59

While the majority has properly affirmed the district court on most of the
thorny issues in this complex and messy case, I write to express my
disagreement with its conclusion that G.E. successfully rebutted element four of
the prima facie case of quid pro quo sexual harassment.

60

The lower court's finding of fact, which the majority accepts, that Neal did
process and submit the necessary paperwork for Spencer's promotion is, to my
mind, clearly erroneous.1 Insofar as G.E.'s rebuttal evidence hinges on that fact,
the presumption of quid pro quo harassment has not been rebutted.

61

In his opinion, Judge Ellis specifically found "Neal's testimony is generally not
worthy of belief." Spencer, 697 F.Supp. at 209. It would be understandable for
the district court, nevertheless, to credit Neal's testimony in some areas
especially if corroborated by other evidence. Such is, however, simply not
possible with regard to his testimony regarding submission of Spencer's
promotion papers. Neal was asked repeatedly by G.E.'s counsel, Spencer's
counsel, and the court whether he filled out and submitted the paperwork for

Spencer's promotion. His responses varied. In reply to G.E. asking if he filled

out the paperwork recommending her for a promotion, Neal replied, "I think
so." The court asked if he had a specific recollection of having submitted the
papers and he replied "no, sir." Later, he responded once that he had filled out
the paperwork and then again that "I thought I did." He never was able to
remember to whom he submitted this paperwork. He named two individuals to
whom he might have given the papers, both of whom testified for G.E. and
made no mention of the papers. Spencer, in contrast, testified that the manager
of Employee Relations informed her that he had never seen any promotion
papers. Id. at 207. G.E. never even attempted to rebut by producing anyone in
G.E.'s employ who received the papers advocating Spencer's promotion.
62

Both parties agree that any rebuttal of the prima facie case hinges on Neal's
testimony. The very testimony of Neal on that subject is simply not believable
on this critical point and hence I part company with the majority and cannot
find the presumption of sexual harassment to be rebutted.

63

Insofar as a reversal of the quid pro quo question would require a remand for a
determination of damages, I also must necessarily disagree with the judgment
comparisons for Rule 68 purposes.

When Spencer reported these allegations to G.E. in late October 1986, she was
immediately transferred to the same grade level position in another G.E. office.
G.E. then promptly investigated the charges and Neal was removed from his
management position, without a reduction in pay, in December. In April 1987,
when it became evident that Neal had lied during the investigation, he was
forced to resign. Spencer, 697 F.Supp. at 215-16

On June 23, 1988, Spencer appealed this order and G.E. cross-appealed. Nos.
88-3897, 88-1302

From this judgment, Spencer appealed both the quid pro quo finding and the
denial of injunctive relief. No. 88-1389

Spencer also appealed this ruling. No. 89-2323

G.E.'s offer included $10,000 plus costs and attorneys' fees, reinstatement of all
leave days expended by Spencer, placement of Spencer in a position of equal
grade as her previous position, and an injunction prohibiting G.E. from any
employment practice violating Title VII. Id. at 1241

This rule has been met with criticism in other circuits. Dwyer, 867 F.2d at 192
n. 4. Much of this criticism centers on the premise that this rule is in derogation
of a plaintiff's right to a jury and an invasion of the jury's exclusive province as
fact finder. Without commenting on the validity of this premise, we note that it
is substantially missing here because Spencer made the tactical decision to
dismiss her jury claims to pursue the Title VII claims before the court

We express no opinion as to the collateral estoppel effect of the trial court's

findings in any subsequent action by Spencer against Neal personally

We do not reach G.E.'s argument that, under these circumstances, the WCA
bars a negligent supervision cause of action

Our holding that G.E. cannot be held vicariously liable for any of Neal's
tortious actions obviates any need for us to reach Spencer's argument over the
"continuing tort" exception to the Virginia statute of limitations. Similarly,
there is no need for us to reach her evidentiary challenge. Further, we express
no opinion on the district court's alternative holding that the intentional
infliction of emotional distress claim was barred by the WCA

10

Of course, in a case such as this where the sexual harassment is being

committed by one of the employer's supervisors, this element is automatically
met because under 42 U.S.C. Sec. 2000e(b) knowledge of the harassment is
imputed to the employer through its agent-supervisor. Spencer, 697 F.Supp. at
217, citing Meritor Savings Bank, 477 U.S. at 72, 106 S.Ct. at 2408

11

It is noteworthy that Spencer does not contend that any of these findings are
erroneous. Thus, we are bound to accept them for purposes of this appeal

12

This is, of course, only part of the court's duty to remedy discrimination under
Title VII. A court must also structure its order to eliminate the effects of past
discrimination. Albemarle Paper Co., 422 U.S. at 418, 95 S.Ct. at 2372. As the
district court concluded, no further relief was necessary on its part because G.E.
had already done this by transferring Spencer to a job of equal grade and
forcing Neal to leave the company. Spencer, 703 F.Supp. at 469

13

The trial court was correct that once Title VII liability was established, the onus
to produce evidence that sexual harassment will not recur lies with the
defendant, G.E. However, the ultimate burden of proof that an injunction is
necessary always remains with the plaintiff, Spencer. Spencer, 703 F.Supp. at
469-70 n. 10

14

G.E. also contends that Spencer's excessive settlement demands and fee
requests justify a denial or reduction of the award. We reject these arguments

on the reasoning of the district court. Spencer, 706 F.Supp. at 1243-44. G.E.
also maintains that the pre-offer fees awarded were excessive. However, our
review of the record demonstrates that the lower court's calculation of pre-offer
fees was reasonable and should be affirmed. Id. at 1244-48
15

The Court was specifically addressing 42 U.S.C. Sec. 1988; however, this
reasoning applies equally to fee requests under 42 U.S.C. Sec. 2000e-5(k)

16

The Court rejected such a rule because of its inherent unworkability. To hinge
recovery of fees on the determination of a plaintiff's desire of what she most
wanted to achieve by a lawsuit would mire the courts in endless fee litigation
over issues of subjective intent that have nothing to do with the purposes of the
fee-shifting statutes--to ensure enforcement of the civil rights laws. Id

17

In Chesny, the Court was examining the interplay between Rule 68 and 42
U.S.C. Sec. 1988. However, its reasoning applies with full force to fee requests
under 42 U.S.C. Sec. 2000e-5(k). Bentley v. Bolger, 110 F.R.D. 108, 112
(C.D.Ill.1986)

18

While the Rule speaks only of "costs," it is settled that in litigation under civil
rights statutes that contain fee-shifting provisions which award attorney's fees
as part of costs, attorney's fees recovery is also subject to the Rule. Chesny, 473
U.S. at 9, 105 S.Ct. at 3016

19

Perhaps the district court took this approach assuming that it should look at the
same total relief received by Spencer in making the Rule 68 comparison as it
did in making the "prevailing party" determination under 42 U.S.C. Sec. 2000e5(k). As we set out below, this assumption cannot stand because it disregards
the plain language of the Rule

20

The court in Stewart v. Sonoma County, 634 F.Supp. 773 (N.D.Cal.1986),

rejected a similar argument. There, the plaintiff argued that it was unfair to
make the Rule 68 comparison only to the judgment she received when it was
possible that she might obtain more relief in pending state court actions. In
rejecting this argument, the court reasoned that such an interpretation of Rule
68 would lead to uncertainty in settlement negotiations and that "[h]ad the
result obtained by plaintiff been intended, the rule would have referred to
recovery instead of judgment." Id. at 776; see also Johnston v. Penrod Drilling
Co., 803 F.2d 867, 870 (5th Cir.1986)

21

The clear disparity between the judgment that Spencer was offered and the
judgment that she obtained makes it unnecessary for us to rule on the parties'
and amici's various suggestions as to how a trial court should weigh the relative
worth of pecuniary and non-pecuniary relief in striking the Rule 68 balance.

The question of if and, if so, how non-pecuniary relief should be assessed and
the question of whether or not a court should try to compare pecuniary with
non-pecuniary relief are thorny issues that we leave for another day. We
reiterate, however, that the touchstone of any valid comparison under Rule 68
must be the Rule's plain language
22

G.E. does not raise and, consequently, we do not reach the issue of G.E.'s
entitlement to costs under the Rule. See Crossman v. Marcoccio, 806 F.2d 329
(1st Cir.1986), cert. denied, 481 U.S. 1029, 107 S.Ct. 1955, 95 L.Ed.2d 527
(1987)

Contrary to the majority's assertion (n. 11), Spencer did not refrain from
challenging those findings. Rather, in the context of urging us to find, as we
have, the establishment of a prima facie case, she devotes two pages of her
reply brief to the insufficiency of the evidence establishing that Neal submitted
the promotion papers